Police found the video, which orders Madrid to pull its troops out within a week, in the wreckage of an apartment where a group of Islamic militants blew themselves up during a police stakeout last weekend.
The video, discovered as the country steeled itself for a possible Easter terrorist attack, showed three armed men wearing traditional Arab costumes reading out the ultimatum in Arabic, according to interior ministry sources.
"The Al Mufti and Ansar Al-Qaeda brigades have resolved to follow the path of jihad (holy war)," said the text, which demanded the "immediate" withdrawal of Spanish troops from "Muslim lands," according to a Spanish translation released by the ministry.
"Unless you do so within a week from now, we will continue our jihad unto martyrdom," the text said.
"We will kill you anywhere and anytime... Our innocents are dying in their thousands in Afghanistan and Iraq. Is your blood worth more than ours?" - the ultimatum said.
Spain's incoming Socialist government has pledged to pull out the 1,300 troops stationed in Iraq by June 30 if there is no UN mandate to control operations there, but has pledged to increase its presence in Afghanistan.
Seven suspects in the March 11 train bombings killed themselves on Saturday after they were cornered by police in a southern suburb of Madrid.
Police have identified four suspects killed during the raid, including the presumed mastermind of the attacks but are still hunting Islamic militants still at large, including a fugitive Al-Qaeda suspect.
The bombings of four commuter trains at three railway stations killed 191 people and wounded 1,900 more in Spain's worst terrorist attack.
Spain has ramped up security amid fears of an Easter holiday attack, with 100,000 personnel monitoring rail transport, airports and sites such as nuclear reactors and reservoirs.
Newspaper reports on Thursday said those behind the March 11 bombings had planned other attacks, including a strike on a major shopping centre during Easter week, the holiest period on the Christian calendar.
The El Mundo daily reported that at least two bombs primed for use were found in the rubble of the apartment raided last weekend.
Spanish police are holding at least 17 suspects, most of them Moroccan, over the Madrid train bombings.
But at least three militants are feared to have escaped the police dragnet, including Amer El Aziz, Sanel Sjekirica and Rabei Ousmane Ahmed, according to Spanish counter-terrorist sources.
Aziz, who has been wanted since November 2001 for links with Spanish cells of the Al-Qaeda network led by Osama bin Laden (news - web sites), is believed to have strong links with the March 11 attacks and his arrest is considered essential by investigators.
Bosnian police were also trying to establish whether Sjekirica has Bosnian citizenship, the international police agency Interpol said.
Police have yet to track down three other suspects named in a March 31 arrest warrant, although there was a possibility one or several of them they may have died during the weekend stake-out.
"We have identified the perpetrators of the attacks in Spain and we are now trying to find out who planned them outside Spain," a Spanish counter-terrorist source said.
Spanish authorities have been focusing their probe on the Moroccan Islamic Combatant Group (GICM), which is linked to Al-Qaeda and has been blamed for the bombings in Casablanca in May last year which killed 43 people.
A Spanish newspaper reported on Monday it had received a letter purporting to be from Al-Qaeda which warned Spain to withdraw its forces immediately from Iraq and Afghanistan or face "hellish" consequences.
The incoming Socialist government said on Thursday it would consider setting up an elected Muslim council with the authority to vet mosques and audit their finances, as a means to counter Islamic extremism.
Spain, which came under Muslim rule between 711 and 1492, today has about 260,000 Spanish and another 230,000 immigrant Muslims, nine-tenths of them Moroccan, out of a total population of 41 million.
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